1. Instant income
One key advantage is that you’ll start making rental income straight away. If the rent is higher than the costs you incur from property maintenance, you could also enjoy more of an income.
The costs incurred for your rental property could include:
- Mortgage or loan payments
- Allowing for tax and periods with no income
2. The property is set up for letting
The property is already set up for letting purposes, including having:
- Alarms, fire doors and extinguishers already in place
- Gas and electrical safety checks distributed
- The condition already passed through the Housing Health and Safety Rating system
3. No need to refurbish
By already having a tenant in situ it is unlikely that you will need to refurbish any time soon. If the tenants are happy going through with the change of owner, it’s likely they will be happy with the standard of their accommodation.
1. Dubious legalities
You just never know the legalities of a let and you might end up paying more than you thought to fix any problems. Please ensure you find out whether the property is legally let out before you receive a fine.
2. Removing tenants
It may not be as easy as you think to remove sitting tenants. Firstly, they will need to receive a two month notice, but if they’re in their initial six month agreement you’ll need to wait until month four.
You’ll need to ensure that the tenants have received paperwork like the How to Rent Guide in order to be able to evict them. Do also check if the tenants have asked for repairs that haven’t been carried out.
In order to avoid any of these cons, you’ll need to check these issues before owning the property.
Some questions you should be asking the seller
Please use a solicitor or conveyancer who will know exactly what to ask. The questions below are some that you may want to consider.
- When were the safety checks last completed?
- Does the property have valid certificates for energy, gas safety and electrical safety?
- What fully functioning fire safety measures have been installed?
- Will this property require a licence?
- Has the seller come across any local council restrictions?
- Is the property furnished and does it comply with fire resistance standards? (It’s worth checking for warranties or guarantees.)
- Have the portable electrical items had the Portal Appliance Test in the last year?
- At the start of the tenancy was there a full inventory taken? Ensure that you ask for one.
- When was the starting date of the current tenancy and associated details?
- What are the details around the deposit registration?
- Have there been any issues with the tenant and rent payment?
- What is the rent due date and payment details?
Ensure that these questions are answered in order to avoid the cons above.
Key points to bear in the mind
Investigate the different deposit protection schemes in order to easily transfer the deposit ownership to yourself. Once you’ve chosen your provider, you will need your landlord ID and reference number to give to the seller. They will then transfer the deposit to you.
The tenancy agreement
The change of ownership means that, legally, their original tenancy still stands. It’s worth speaking to the tenant to discover whether they’re willing to sign an assured shorthold tenancy agreement with you, for 6 month security. If they say no then you’re both bound to the terms of the original agreement your tenant signed – ensure that is still legally compliant.
If you’re unhappy you will still need to give your tenants notice and then find new tenants.
Dealing with the agent
If an agent is in charge it may be an idea to leave things as is for the moment, as the agent will deal with tenants for you.
Once property ownership has transferred to you, you can then start to compare agents and the services they offer and find one who offers client money protection and is a member of a professional organisation.
Should you decide to sign a contract, ensure you’re aware of the minimum term (how long you’re committed to using them). Some agent may charge if you’re looking to leave, so let the seller know as soon as you know that you do not want to continue using their agent.
Do you need a new inventory?
As you’re taking over the tenancy from a previous landlord, there should be no need for a new inventory to be carried out. But, you may feel that the original inventory clerk wasn’t the best, in which you case you should let an independent inventory clerk carry out an inventory as soon as possible. You will need to arrange access with the tenants.
Getting to know the existing tenants
A good first step is to introduce yourself to your tenants, reassuring them that nothing will change and informing them that they can always contact the agent if they need anything.
If you’re looking to manage the property yourself, you should meet your tenants as soon as contracts have been exchanged. If you’re intending to go into property management, it’s a good idea to consider the legalities.
Consider using an agent, a member of a local accreditation scheme or landlord association such as the Residential Landlord Association. A buy-to-let property should be a beneficial move for you and that should be the case as long as your legal representative goes through all the necessary checks.
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